Wondering How To Make Your Games Into A Revenue Generating Resource?

After Pokemon Go was released worldwide, it took less than a day before it was making more money than all the other apps in both Apple’s & Google’s App stores. It has already earned above 14 million dollars in revenue since the day of its launch, and users didn’t have to pay a cent for it! How did Niantic accomplish this milestone?

All that money was coming from optional purchases people were making as they played. This is the world of “Freemium” Apps. The business model of free-to-play + in-app purchases that allow gamers to enjoy a premium experience. A business model in the past few years that has largely wiped out the market for paid games.

Now game designers can to monetize the gameplay, and one way to do that is by applying the fundamentals of behavioral psychology. The 1st thing these games do is set up a virtual currency so that it doesn’t feel like you are spending real money, even though you are… This is a variation on something we’ve known for decades, i.e, people find it harder to spend money when they’re paying in cash than if they are using their credit cards. This is because “when you pay cash for something, you see it leave your hands & get an immediate sense of how much your cash reserves have dropped, or how much your wealth has dropped” as Jamie Modigan puts it, author of a blog, podcast, and book about the psychology of video games.

This is how game developers monetize with their free-to-play games:

You pay for ‘in-app items with virtual currency and you pay for virtual currency with your credit card, which is already distanced from the actual payment. On top of that, they don’t make the exchange rate simple. It’s not 50 gems for 50 cents. It’s always something more, like $1 will give you 12 gems. So basically, you are burning through cash that doesn’t seem to be real and it only takes a second in light of the fact that the app store already has your credit card details. The whole payment process is designed to be painless, and other parts of the game are designed to be painful.

Game developers actively embed inconvenience into their games so that you can purchase convenience. Take Clash of Clans or Game of War as examples, everything you try to build has wait times that progressively get longer but are skippable for a price. This can be done either by paying for gems, or another tactic of applying adds for game developers to earn revenue if the user follows the instructions.

A key finding of behavioral research is that we tend to experience unexpected losses more intensely than comparable gains, which can lead to purchase prompts that developers can monitor from your account. Ultimately though, only a tiny percentage of ‘players’ actually become ‘payers’ and a small percentage of payers are those so called “Whales”, players who are willing to spend hundreds if not thousands of dollars into a game via micro-transactions & in-app purchases.

A recent study report estimates that about half of the revenue for mobile games is coming from less than half of a percent of all players. Which means that for some of these games, non-paying players, which is most people, are essentially pouring time into a game designed to hustle your way to the top either by grinding your avatar to the max level by completing levels specifically designed to waste your time or by quickly leveling up by purchasing convenience. If you’re really having fun, then that’s great, but it might be worth rewarding games that find another way.

As of now, the monetization of Pokemon Go is unobtrusive. And the lack of manipulation is pretty good reason to buy some ‘lure modules’ and some ‘incense’.

One argument in favor of free-to-play games and in-app purchases is that they give developers a reason to keep updating the game, and they can collect tons of data in order to inform those updates; things like where you get stuck, where you close the game, which features are most popular, etc… All that data can help them keep making games that you want to keep playing. But it also means that they can tweak the prices based on individual profiles &behavior.

Author:Vivek Shah

Vivek Shah is the Founder and CEO of Capermint Technologies Pvt Ltd : A leading Mobile Games & App development companies . As a CEO, he likes to help other companies to transform their app ideas into reality.